ISA vs Savings Account Calculator 2026/27
Find out whether you'd be better off saving in a Cash ISA or a standard savings account, based on your tax band and savings allowance.
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Results are estimates only and do not constitute financial advice.
ISA vs savings for higher rate taxpayers (5% ISA, 5.2% savings, 5 years)
Assumes higher rate tax (40%), £500 personal savings allowance. Click any row to load it into the calculator.
| Amount | ISA total | Savings total | Tax paid | ISA advantage |
|---|
How it's calculated
For the Cash ISA, interest compounds annually and is always completely tax-free. The formula is: FV = Principal × (1 + rate)^years.
For the savings account, the Personal Savings Allowance (PSA) is applied first: basic rate taxpayers can earn £1,000 of interest tax-free; higher rate get £500; additional rate taxpayers get nothing. Interest above the PSA is taxed at your marginal rate.
The calculator compounds the savings account year-by-year, deducting the applicable tax on interest above your PSA each year. This gives an accurate picture of the true after-tax return over time.
Frequently asked questions
£20,000 per person per tax year. You can split this across different types of ISA: Cash ISA, Stocks and Shares ISA, Innovative Finance ISA, or Lifetime ISA (up to £4,000 for the LISA).
Yes — you can hold both simultaneously. Many people keep an ISA for their main savings pot and use a standard high-interest savings account for their emergency fund or short-term goals.
Basic rate taxpayers can earn £1,000 of savings interest tax-free per year. Higher rate taxpayers get £500. Additional rate taxpayers receive no allowance at all — making ISAs especially valuable for top earners.
The ISA allowance for 2026/27 is £20,000 per year. Interest earned in a Cash ISA is always tax-free, regardless of your income. This calculator assumes all savings are within the ISA allowance.